Is the Sam Bankman Fried trial going to finally go into the direction it has so studiously avoided from the start— the millions and millions of dollars SBF gave to Members of Congress? Maybe even a little about what he got in return? I doubt it, but one Member of Congress, who was savvy enough to resist the temptation while most of his colleagues weren’t, slipped me a spreadsheet last night and said he thinks it’s going to be introduced as an exhibit at the trial.
I’ll believe that when I see it. The sheet he showed me was for well over $100 million— that’s “Koch Brothers-type money” he mentioned— with characters like Mitch McConnell getting $10 million and Chuck Schumer getting $5 million. Should they share a cell? I don’t care… as long as they both die in prison, an example to future members of Congress who believe they can take bribes from “businessmen” with impunity. Here’’s a completely random chunk of spread sheet:
Let me skip over the dozens and dozens of $5,800 political contributions to members like Susan Collins (R-ME), Hakeem Jeffries (D-NY), Lisa Murkowski (R-AK), Pete Aguilar (D-CA), Mitt Romney (R-UT), Josh Gottheimer (D-NJ) … and think about the more targeted amounts laundered through groups like EMILY’s List ($2,250,000), Kevin McCarthy’s Congressional Leadership PAC ($2,750,000), Pelosi’s House Majority PAC ($6,000,000), Gabe Bankman-Fried’s Protect Our Future ($25,000,000) and on and on towards an infinity of acronyms, initials, leadership PACs, etc. Not to mention the tens of millions that went to Bankman-Fried’s relatives, friends, and favorite organizations— like Stanford University’s Law School, often to see that money also passed on to political bribees. Can anyone look at this list and NOT wonder what SBF was getting in return? How many on this list solicited the money? What kind of promises did they make? This isn’t just SBF playing Santa Claus– this is a leveraged buyout of our entire political system. Now that we know “what,” we have to get to “how” and “why,” and rid ourselves of everyone who was, and is, on the take. (The utterly crooked parents— who taught SBF everything he knows about entitlement and felony— worked at Stanford Law.) Speaking of which…
New York Magazine ran a piece by Theo Baker, a Stanford underclassman, the other day, What’s The Matter With Stanford? effortlessly tying SBF (“not a Stanford alum”) to everything that’s wrong with Silicon Valley U, Inc. The crooked parents raised him there, “in Silicon Valley’s techno-idealist training school… It’s this world that gave him credibility, helped him build his fortune, and provided him with an identity. ‘He was brought up as a utilitarian by his parents, two Stanford professors, is serious, dedicated, and committed to doing good,’ reads an email sent by one of Bankman-Fried’s early proponents in Michael Lewis’s new book, Going Infinite. And when it was revealed that Bankman-Fried’s intentions were not, in fact, to do good, it was Stanford where he returned, under house arrest amid its bucolic palms… the kind of fraud that Silicon Valley specializes in producing: the philosopher con artist. One of the most prominent proponents of effective altruism, he advocated doing the most good for the most number of people— or, in his case, making the most money possible in order to give it away. Stanford went mad for this story of an upstart entrepreneur trying to improve the world and making a killer fortune on the way. SBF lived the Stanford student’s dream, an eccentric visionary with a sprawling pad in the Bahamas and the adulation of the media and the markets alike.”
His undoing— playing out now in a federal courtroom in Manhattan, where Bankman-Fried is charged with wire fraud and money laundering— would seem to puncture those fantasies. And to some students, his story is a cautionary tale, the result of avarice and overambition. But for many people at Stanford, where I am a sophomore, it’s simply a laughing matter.
SBF’s trial is the capper to Stanford’s annus horribilis. Just weeks before he was indicted, fraudster Elizabeth Holmes was sentenced over her failed blood-test start-up, Theranos, which was founded using Stanford’s name as cachet and bankrolled by many a famous Stanford alum. Do Kwon, another Stanford alum, was arrested earlier this year for a multibillion-dollar crypto scheme. And Stan Cohen, an active Stanford professor, was found liable in court for tens of millions of dollars worth of fraud.
More than ever, it would seem Stanford is due for some serious introspection. Yet the one thing Silicon Valley seems incapable of is shaking off its own mythology.
Because his parents live in faculty housing, SBF became a bit of a campus curiosity. People would wander by the family’s home out of idle curiosity, sometimes even on dates. Over the past year, there have been several SBF-themed parties and sketch-comedy shows. And there is plenty of comedy to be found. Just months before his arrest, he had been invited to speak at a Stanford tech-ethics course. According to Lewis, SBF bragged about escaping oversight and avoiding traditional accounting, hubris that is laughable given the $8 billion that remains missing from FTX’s accounts.
But the gravity of his alleged crimes shouldn’t be understated. Lewis said in a 60 Minutes interview that the only people he hurt were “crypto speculators in the Bahamas”— as witness testimony has laid out during SBF’s criminal trial, this is blatantly untrue. Billions of dollars of customer funds were misappropriated, and now, at the end of it all, it’s pensioners, small-time investors, and more than a few kids my age left to foot the bill. Meanwhile, students at Stanford are wondering how they could achieve the same heights as him— just without the epic downfall.
It may be hard to imagine Bankman-Fried as a role model these days; he’s looked down on by pretty much everyone at this point (aside, perhaps, from Michael Lewis). But kids of my generation, and particularly the kids at Stanford, have been fed story after story about Silicon Valley and its infinite opportunities. Many grew up longing for Stanford and the access the school would give to that world. When they arrive, they treat the Stanford student body’s favorite movie, The Social Network, as a how-to guide in the same way that finance bros valorize the “Greed is good” speech from Oliver Stone’s Wall Street— which, to be clear, is about how greed is bad.
Lewis’s book, inadvertently, helps explain some of the dysfunction. Joe Bankman and Barbara Fried only “briefly attempted to inflict upon” SBF “a normal childhood before realizing that there was no point,” the book says. Instead, he was treated as a proto-adult, his ego flattered as his brilliance was proclaimed to Stanford dinner parties full of venerated guests— a poignant mirror image of how SBF would later be treated as an actual adult: a “child” billionaire, an innocent financial savant.
This is a childhood that may seem familiar to a lot of Stanford students. Many kids who come here have spent their whole lives believing that they are the next tech Jesus— they have what it takes to beat the odds and sit on top of the world. The emotional stuntedness of that sort of childhood reverberates around the Valley, where self-interest and egoism run amok. SBF neatly fits into that model; according to his on-and-off romantic partner (and, if prosecutors are to be believed, partner in fraud) Caroline Ellison, SBF believed he was going to be president of the United States one day. It is worth noting that Ellison, who says she helped misappropriate funds at SBF’s direction, is a Stanford alum.
The fraud cluster at Stanford— like the suicide clusters that wracked Silicon Valley a few years ago— is a product of culture. The warning signs have been there for years, but Stanford barreled past them. Now, with a spate of what our new president, Richard Saller, has called “fake it till you make it” actors, the decision to embrace Silicon Valley’s accelerationist mind-set has come back to bite.
Eleven years ago, Ken Auletta published an article in the New Yorker that called the school “Get Rich U” and delved into the conflict between education (the school’s ostensible purpose) and naked entrepreneurship, facilitated by venture capitalists who see the school as a hotbed for world-upending breakthroughs and get-rich-quick schemes alike. “There are no walls between Stanford and Silicon Valley,” he wrote. “Should there be?”
Some professors thought, and indeed some public commentators wrote, that this would engender a reckoning, that Stanford would finally have to think critically about the billions of dollars it hoovered up from the tech world. People feared that prospective students would no longer be interested in an institution that was tainted by so much lucre. But of course, the opposite was true. Stanford is harder to get into than ever before, its admissions rate more than 100 percent lower than it was in 2012. Meanwhile, its endowment is more than 100 percent larger.
This morning, Brendan Pederson reported that a large bipartisan group of Congress members led by Elizabeth Warren— who took no FTX bribes— are pressing Biden (who did) for answers about the role crypto played in financing the recent Hamas terror attacks on Israel, pointing to reporting, Hamas Militants Behind Israel Attack Raised Millions in Crypto, in last week’s Wall Street Journal that scrutinized the financing of terror attacks from Hamas and Palestinian Islamic Jihad on Israel. In her letter, Warren wrote that “Given the clear and present danger posed by the financing of these and other militant organizations, we ask the Administration to provide additional details on its plan to prevent the use of crypto for the financing of terrorism.”
“Warren,” wrote Pederson, “has pushed for stricter anti-money laundering standards targeting the crypto sector.” Ironically, one of the worst of the House SBF bribe takers, generally crooked Democrat Sean Casten (IL) is leading the charge on the House side. “Even before today’s letter, the bedraggled crypto sector has been treating the Hamas-crypto narrative like a five-alarm fire in Washington. Advocates argue that well-known crypto firms such as Coinbase have established relationships with law enforcement and have a track record of identifying illicit activity. But the crypto sector simply doesn’t have a lot of goodwill in Washington these days. If there’s a chance that Warren and other supporters could tack their bill onto another piece of legislation, we expect them to seize the opportunity.”